January 29, 2013 - EPA's attempts to overcome the invalidation of the EPA's Cross-State Air Pollution Rule (CSAPR) were rejected on Thursday, January 24, 2013 by the U.S. Court of Appeals for the D.C. Circuit. This decision is a major victory for several states, including Texas, who led the fight against CSAPR based on concerns with the rule's questionable scientific basis and disproportionate impact on states like Texas.

Balanced Energy for Texas commends the Texas officials who led this fight, including Governor Perry and Attorney General Abbott. This win has paved the way for the Texas coal-fired electric generation fleet to help keep the lights on and let the Texas economy continue to expand. As recent reports from the Electric Reliability Council of Texas (ERCOT) demonstrate, our demand for electricity continues to grow with our State's population and energy economy. We will need all sources of generation (coal, gas, nuclear, and renewables) to meet our increasing needs. Defeating EPA's "war on coal" and keeping it off Texas soil will be critically important because we have no megawatts to spare.

HISTORY OF THE CSAPR AND THE COURT'S DECISION

On August 21, 2012, a three-judge panel of the D.C. Circuit, in a 2-1 decision, vacated CSAPR. This decision was upheld on January 24, 2013, when EPA and other parties' requests for a rehearing were denied.

At the CSAPR proposal phase, Texas was only included in the rule for a limited, seasonal, NOX program. EPA finalized CSAPR on August 8, 2011, and without notice, included provisions in the final rule that forced Texas to comply with the much more significant NOX and SO2 annual programs effective January 1, 2012. With less than five months to comply, Texas was asked to reduce its SO2 emissions by 47% and account for over 26% of the nationwide SO2 emissions reductions in 2012. These reductions were extremely disproportionate compared to the relatively minor impacts projected from Texas sources. It was estimated that this would increase electricity prices by at least $1 billion per year in Texas and would force up to 1,500 MW of retirements during summer peak demand periods, jeopardizing electric reliability in the state.

Following CSAPR's finalization, over 45 parties filed suit in the D.C. Circuit, including the State of Texas and several Texas electric utilities. The petitioners argued that the rule violated the Clean Air Act and requested that the rule be vacated. The Court first agreed to stay the rule on December 30, 2011, two days before its mandates were to start, based on a finding that the rule could cause irreparable harm to the upwind states and generators. After full consideration of briefs and oral argument, a three-judge panel issued the August 21, 2012 decision agreeing with the petitioners and vacated CSAPR, finding that EPA exceeded its Clean Air Act statutory authority in two fundamental ways. First, EPA's emissions limitations required certain states, like Texas, to make emission reductions far greater than their share of contributions to downwind air quality standard exceedances. Second, the rule did not provide an opportunity for states to establish their own standards prior to federal action.

WHAT'S NEXT?

Barring the very unlikely scenario EPA successfully appeals this decision to the Supreme Court, EPA will be forced to go back to the drawing board and promulgate a new replacement to CAIR that comports with the D.C. Circuit's ruling. While EPA will certainly build on some of the technical and monitoring data it relied upon in the CSAPR rulemaking, it will have to make dramatic changes to comply with the clear direction given by the court to not disproportionately burden upwind states like Texas. This will likely take years to become effective. Until a CSAPR replacement is finalized, CAIR will remain in effect, which will continue the progress made by states, like Texas, in air quality improvement. Experts agree that the Texas coal fleet, because of its youth and state-of-the art emission controls, can continue to be fully compliant with CAIR without endangering electric reliability or dramatically increasing electricity rates.

Other fights against EPA's "war on coal" continue to loom, but the victory over EPA in the CSAPR battle bodes well for the future of the Texas fleet and the continued growth of the Lone Star State.